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TMI Blog2018 (7) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in confirming the action of Learned Assessing Officer in reopening the assessment completed u/s. 143(3) of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 2. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in rejecting the books of accounts u/s.145{3) of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 3. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of ₹ 1,66,68,5827- u/s.69C of the Income Tax Act, 1961, on account of alleged bogus purchases (on the basis of peak theory), without considering the facts and circumstances of the case. 4. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition on accOL5ntlof^suppression of Gross Profit of ₹ 3, 33, 3727- (being 2% of alleged bogus purchase' of ₹ 1,66,68,5827-), without considering the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee, the purchase bills showed deficiency such as absence of vehicle details, proof of payment of octroi, ledger account of transporters, transported goods, etc. Therefore, determined the purchases made from the above parties for the 3 assessment years starting from AY 2008-09 to 2010-11 and worked out peak balance of ₹ 1,66,68,582. Since the assessee failed to prove purchases from the said parties with credible evidence and also the fact that the names of those parties are appearing in the list of hawala operators, made addition towards peak balance of ₹ 1,66,68,582 u/s 69C of the Incometax Act, 1961. Further, the AO also made addition on account of gross profit on bogus purchases @2% on peak credit and made addition of ₹ 5,33,372. 3. Aggrieved by the assessment order, assessee preferred appeal before CIT(A). Before the CIT(A), the assessee has filed elaborate written submissions which has been reproduced at para 7.2 on pages 3 to 6 of Ld.CIT(A) s order. The sum and substance of arguments of the assessee before the CIT(A) are that the purchases from the above parties cannot be considered as bogus when assessee has furnished purchase bills, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm as certified by the Director. This remark clearly indicates that only on the basis of certificate of director the appellant takes consumption figure and closing stock valuation. The appellant cannot prove from its record that the material is actually consumed. The appellant has submitted a two page statement vide paper book page no 2 3 and shown that the material is consumed. These two pages cannot proved that / - the materials were actually utilised. 2 The appellant submitted the bills but it is seen that the bills do not contain transport details. The appellant during appellate proceedings, submitted a work sheet prepared by Jayant Roadline and only on such work sheet the appellant tries to explain that the material were received. On that work sheet only signature only appears but other details such as who prepared it and corresponding bills of transportation were not attached. The work sheet does not mention from where goods were taken and to where goods were despatched. Therefore, it is held that the work sheet is not a reliable document. In the absence of direct evidence, I cannot hold that the appellant had discharged its onus to establish that the purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,66,68,582 u/s 69C, without appreciating the fact that the purchases are supported by valid evidences and the assessee has filed necessary evidences before the AO. The Ld.AR further submitted that the Ld.AO made addition towards bogus purchases by working out peak balance for last 3 financial years and also made addition of 2% GP on such purchases only on the basis of statement of third party without confronting such statements to the assessee for its rebuttal. The assessee has filed purchase bills and payment proof for such purchases; however, the AO has ignored all evidences filed by the assessee only on the basis of statement of those parties and also on the basis of non response by the parties to the notices issued by the AO u/s 133(6). The additions made by the AO is not based on any deficiency in the books of account of the assessee that the books of account are not giving true and correct result of the assessee but purely on assumption and presumptions, therefore, the addition made by the AO should be deleted. 6. On the other hand, the Ld.DR strongly supported the order of the Ld.CIT(A). The Ld.DR further submitted that it is an admitted fact that the parties were appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee did not contain necessary information about the vehicle No. for transportation of goods, but that itself, cannot be a ground for the AO to take adverse inference on the purchases of the assessee when the assessee has filed certain basic evidences to prove the purchases. At the same time it is also an admitted fact that the assessee failed to file further evidence in the backdrop of clear findings from the sales-tax department that these parties are involved in providing accommodation entries. Further, the parties did not respond to the notices issued by the AO u/s 133(6) of the Act. Under these circumstances, it is very difficult to accept the arguments of the assessee that purchases from those parties are genuine in nature and also the version of the AO that purchases from those parties are fully bogus in nature. In such scenario what is needed to be considered for addition is whether total amount of such bogus purchases or only the profit element embedded in such purchases. Various courts and Tribunals have taken a consistent view that in the case of bogus purchases, what is needed to be taxed is only profit element embedded in such purchases, but not the whole bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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